Therefore, it’s no surprise that when it comes to selling in NYC, many want to go it alone. Here are pros and cons of doing a FSBO vs. hiring a broker.
Pros of doing a FSBO
For sellers who want to save 6 percent on the real estate commission, particularly with such big price tags that define NYC real estate, doing a FSBO (For Sale by Owner) is tempting.
Here are the pros of doing a FSBO:
You know your building better than anyone
Many New Yorkers obsess over real estate and track recent sales in their building. And as a diligent owner, you are probably very familiar with the different floor plans, exposures and red flags of your building. Simply by having lived there so long you have a leg up.
Additionally, by using StreetEasy, you can quickly come up to speed on the last few months of building sales to learn the median price per square foot. That will help to figure out how your apartment compares and help you price it.
It is not uncommon for a broker, called in to see about a potential listing, to spend two hours learning the building and the comps. Unless you work with a Building Expert — someone who has completed recent sales in your building, NYC is just too big for any one broker to know it all.
As a real estate-aware New Yorker, you know what’s happening in the market. You know how your co-op or condo board functions and what the selling attributes are for your building.
The comps are all out there
Prior to StreetEasy, consumers were forced to search multiple brokerage websites to see listings and getting recorded sales or historic data. The process was tedious and next to impossible. These days, anyone using StreetEasy can look up their building, export the recent sales into an Excel spreadsheet and analyze the recent comps in less than 20 minutes.
Most apartments sell themselves
If an apartment is priced right and shows well, it should sell within a few weeks. That is just the nature of our competitive market no matter how far an apartment is from the subway or the number of floors the walk-up. The constant lack of supply and perpetual and insatiable demand from buyers makes it a strong market for sellers, as long as the apartment is presented well and priced right.
If a home sells after one open house, and with multiple offers, was the agent necessary? Or, did the apartment sell itself? Or maybe it was underpriced?
A motivated New Yorker, with some time and effort, will do some investigating and smart marketing of their own prior to going on the market. They can let their doorman know that they intend to sell and will put a note out to their neighbors alerting them to a potential new listing. Many buyers come from within the building and can also put the word out to their networks.
Cons of doing a FSBO
Not unlike other homeowners around the country, there is some uncertainty with going FSBO.
Even though the information is out there and the market seems to move properties without much effort, it comes down to this: Consumers don’t know what they don’t know. It’s that doubt that keeps them from attempting a sale solo.
Here are the negatives in doing a FSBO:
Let’s face it: There simply aren’t enough hours in the day. With work, relationships, children, gym time, parties and events, few New Yorkers have time to catch up with their loved ones or their favorite television show, much less manage an apartment sale. To put it gently, putting your home on the market becomes a part-time job. It starts early with spending many hours doing online research and attending open houses, and then it carries over to preparing and paying for sales and marketing materials.
The next step is to hold open houses and then accommodate dozens of showings for private appointments in which the potential buyer may or may not show up. It’s true that selling an apartment takes up a lot of time, but perhaps you work from home or have time to get it done. Do a cost/benefit analysis of the savings vs. the time spent away from work or other activities to understand best if it makes sense to you.
Lack of “in-market” data
Real estate brokers live and breathe New York City real estate day in and day out. While not all brokers are created equal, there are some great ones who can make a world of difference. A broker who has completed dozens or hundreds of transactions has a certain amount of intellectual capital in their head. They know what to look out for when it comes to choosing the right buyer. They’ve done enough board packages (or at least supervised their 20-something assistant in doing so) to know how to present each buyer to the board.
Good brokers are plugged in and have up-to-the-minute, useful market data and know the trends. Most brokerages have weekly sales meetings where they discuss the state of the market. This is the kind of real-time market data that takes the media weeks or months to pick up.
And most of all, good brokers are experienced negotiators and are able to deftly handle multiple offers without breaking a sweat. When is the last time you negotiated a six-, seven-, eight or nine-figure deal?
Do you really save 6 percent?
As opposed to the rest of the country, the 6 percent broker commission has not wavered much in New York City. Manhattan’s top firms will likely not budge on it, with a few exceptions, such as the seller is a repeat customer (and is also buying through the agent), there is no buyer’s broker (dual agency) or the price of the property is significant.
Perhaps for smaller brokerages that are trying to gain a foothold, there is some flex in the commission — perhaps to 5 percent. But, it’s important to understand that the total commission is split between the seller’s broker and the buyer’s broker.
For sellers who choose to go FSBO, they should offer the 2.5 percent or even 3 percent to the buyer’s broker. Absent that incentive, the buyer’s broker may be less inclined to support their buyer’s interest in your property. So, at the end of the day, the savings may be a lot less than you set out. Is 2.5 percent savings worth your time?
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